3 On Your Side: Federal Agency Pushing For Prepaid Credit Card Protections
By Jim Donovan
PHILADELPHIA (CBS) -- Pre-paid credit cards are becoming increasingly popular. That has a federal agency pushing for some of the same protections consumers have when using other cards.
3 On Your Side's Jim Donovan looks at some of the proposed changes.
Prepaid cards have advantages to many consumers, especially those who have struggled with credit card debt, overspending, and overdraft fees.
They also offer consumers the ability to make transactions online without a credit card, and have become popular among millennials hesitant to take on debt.
But the cards also present some problems. Although some consumers link their prepaid cards to a bank account to manage cash flow with more ease, they lack the protections of a bank-issued debit card.
That's why the Consumer Financial Protection Bureau wants to implement new rules, including:
-- Better disclosure of terms and fees, which are often buried in fine print.
-- Better access to account information. The CFPB proposes periodic statements or greater online access.
-- Protections against errors, unauthorized transactions, and lost or stolen cards.
The CFPB is taking public comment on the rules, and will draft a final version after that period closes in February.
In the meantime, be sure to carefully review the terms of prepaid cards, especially fee disclosures for things like transactions at ATMs, which can add up quickly.
